National Handicapping Championship: At a Crossroads?

National Handicapping Championship: At a Crossroads?http://www.paulickreport.com/news/ray-s-paddock/national-handicapping-championship-at-a-crossroads/Thoroughbred News

Jose Arias won Handicapper of the Year and $750,000 with this year's NHC victory in Las Vegas

In this week’s season finale of the reality show, Horseplayers, on Esquire Network, viewers went behind the scenes of the 2014 Daily Racing Form/NTRA National Handicapping Championship. The show’s 10 episodes chronicled the year-long journey of several handicappers trying to reach that ultimate goal – a seat at the exclusive tournament in Las Vegas each January.

But the Horseplayers audience only got a glimpse of the prestigious event. There’s much more to the story of the National Handicapping Championship, how it continues to evolve, and where it might be headed.

The NHC was established in 1999 with two goals in mind: To celebrate horseplayers and crown one handicapper the best of the year.

With its anyone-can-qualify format, Las Vegas destination, gleaming Eclipse Award trophy for Handicapper of the Year, and big-time prize money, the NHC soon showed potential as a horseplayers’ equivalent to the U.S. Open, Super Bowl, or Stanley Cup – take your pick.

The 160 players who made that first trek to Vegas in January, 2000 competed for the healthy sum of $200,000. In hindsight, it was a humble start.

The tournament took off exponentially in the ensuing years, with a mini-industry of qualifying tournaments and separate NHC Tour springing up with it. For the 15th NHC tournament last January, 3,200 players competed throughout 2013 to land a seat in the field of 500 or so. The NHC Tour and tournament gave out more than $2 million dollars in prizes and other awards. Still, according to its operator, the National Thoroughbred Racing Association, the NHC is far from reaching its potential.

“We absolutely believe this property is in its infancy,” said the NTRA’s Keith Chamblin. “It could eventually be a $5 million or $10 million tournament.”

But it’s not clear exactly how it’s going to get there, and like any business or franchise that blossoms, the NHC’s rise has not come without growing pains.

From financials to formats to the NHC’s raison d’être, players have ramped up their concerns about how the tournament system works and whether horseplayers are truly being celebrated or perhaps getting the short end of the stick in some cases.

For Horseplayers cast member Christian Hellmers, transparency is one of the biggest concerns. Some players are skeptical of the amount of money coming into the NTRA from Tour memberships and seat sales versus the amount that is paid out in prize money. In 2013, prize money and awards equaled $2,069,984 while revenue was $2,400,273.

“That’s ($330,000) not going to players. Where is that money going?” Hellmers asked. “How do we figure the takeout rate? What is going to happen as the tournament grows?”

Chamblin said of the $330,000 profit, around $140,000 paid for tournament expenses with other money going toward the salaries of those involved in putting it on. Money from that pool also goes into marketing next year’s tournament.

Christian Hellmers watches the tote during an NHC qualifying tournament on Horseplayers

Chamblin pegged the NHC takeout rate at 13.76% for 2013, but some players, including Lenny Moon, who did his own analysis of NHC financials in a series of blog posts, believe the math is shaky depending on how you calculate travel expenses, hotel rooms and other factors.

The challenge, Chamblin said, is being able to give horseplayers a hard number for the following year.

“We don’t know where we’re going to land for overall participation for (qualifying) sites around the country,” he said. “As we get toward the 4th quarter, we start to see how online play is being impacted, whether they are selling out (seats).

“It’s not something where we can say takeout next year is going to be X. What we’ve been comfortable doing is guaranteeing what the minimum will be, so players can know what the baseline is.

“Depending on how you look at the structure of the NTRA, we’ve profited off the NHC slightly. Or you could say it’s cost us hundreds of thousands of dollars.”

In addition to the changing financial structure from year to year, the format of the tournament has also been a work in progress, to the chagrin of some players like Hellmers.

“It’s so arbitrary,” Hellmers said. “It just takes a more intellectual approach… built on math and input from the best players. I feel like that’s not happening.”

So far, the NTRA has employed a year-by-year method, making tweaks to the rules based on player feedback. For example, in response to criticism that prize money was top-heavy, the NHC’s first-place payout was reduced from $1 million to $750,000, the amount won by handicapper Jose Arias in January, and awards were paid out to 50th place for the first time. The 2014 NHC tournament was also extended from two days to three, and organizers added a cut-down to 50 players after the 2nd day, with a final table of 10 competing for the top prize. A consolation tournament on day three also kept players sticking around until the end.

“We’re trying to figure it out. We don’t have it right yet,” said Chamblin, who pointed to favorable responses in a survey of players following this year’s tournament.

Professional handicapper and former Thoroughbred trainer Brent Sumja is among those who like the format changes to the NHC tournament. His issue is with the NHC Tour, the year-long qualifying competition that awards seats to the NHC tournament and has its own prize structure.

Sumja happens to be the guy who won the NHC Tour last year.

“I have zero interest in doing the Tour (again). It’s economic suicide,” said Sumja, who won $75,000 for first place (a tenth of the prize for winning the NHC tournament) plus $17,000 in bonuses. Sumja said he spent $40,000 to $50,000 in travel and other expenses to pocket the $92,000.

The problem, according to Sumja, is that the Tour has tilted in favor of online qualifiers that offer seats to the NHC tournament in Vegas but do not have cash prizes attached. Had he finished second instead of first in the Tour points standings, Sumja would have won $15,000, not $75,000, and therefore, would have lost a substantial amount of money in pursuit of the Tour title.

Brent Sumja, winner of the 2013 NHC Tour

“You only have so much money to put in these things. You can’t just be firing money into online that doesn’t pay back anything. You’re getting an entry to Vegas, which is great, but… the Tour has became economically ridiculous to pursue.”

To win either the half-year or full-year standings on the NHC Tour, players do need to have at least one score from a live, on-site tournament, which can offer the possibility of large cash awards. But in previous years, the number of required on-site scores was higher.

Online qualifiers have grown substantially for the logical reasons you might expect – they are convenient and less expensive for both the operator and the player than a live, on-site tournament. In 2006, only 40 seats to the NHC tournament were awarded online. Last year, about half of the 500 seats came through Internet qualifiers.

“The value proposition of this event varies from individual to individual,” said Chamblin. “A lot of players like the online tournaments because they save on travel.”

Still, Chamblin said the NTRA wants to preserve the role of on-site qualifiers as much as possible because they benefit the racetracks. However, the number of tracks that can afford to hold such events may be dwindling. It costs $10,000 for an on-site host to buy three seats to the NHC tournament, but getting that expense recouped can be difficult for smaller tracks because they can’t attract enough players who will pay an entry fee and may have to travel to get to the location. By comparison, online hosts pay $7,250 to the NTRA for each seat but may easily get 300 players to participate and fork over entry fees.

McKay Smith, whose business is online qualifying for the NHC tournament, said even with online qualifiers, the margins are thin since hosts pay not only for seats but accommodations in Vegas, and credit card fees, while trying to keep entry fees reasonable.

“Our net is really no more than 7 or 8 percent,” said Smith, who used to operate the NHC tourney with the NTRA and now runs the qualifying website, www.horsetourneys.com.

Smith said he sees the value in a strong on-track component. In addition to online qualifying tournaments, HorseTourneys also awards seats to various on-track qualifiers and hosts its own event at Laurel Park each year with a purse reaching $200,000 or more.

“It still needs to be an equitable mix,” Smith said. “If the tracks don’t do well, we don’t do well either. That’s where the new player gets harvested. It’s really the on-track experience that creates the online player.”

NHC Tour winner Sumja said the on-track component is also important because horseplayers form relationships, something that could be gleaned from watching the cast of Horseplayers interact at racetracks across the country.

“I think the NHC is awesome, but they’ve really dropped the ball on the Tour,” Sumja said. “It’s really taken the fun out of it. The live tournaments are an incredible experience.”

Perhaps the NTRA needs to better incentivize in-person qualifiers, but whatever the mix of live and online might be in the future, Chamblin said the Tour is a crucial part of the NHC’s growth.

“Our success depends on more players,” he said. “Thousands of core players have yet to experiment with tournament play. Some probably aren’t even aware of it. We’re looking for avenues, building incentives to sign up or trying to come up with tournament structures for newcomers.”

Chamblin said increasing the number of players competing for seats at the NHC tournament will help everyone achieve their goals by boosting revenue and therefore, prize money, but it’s fair to say that a larger tour and tournament will also make the task of qualifying (and winning) that much more difficult for horseplayers.

There’s a $2 million bonus on the line for the player who can win both the NHC Tour and the Vegas tournament, but the chances of that happening are, frankly, minuscule when a player is competing with thousands of others on the Tour and against 400 or 500 opponents in the tournament.

Considering the prize money involved, the Vegas tournament is the ultimate goal and carries with it the Handicapper of the Year award. But it is also a one-weekend, “mythical” betting tournament that doesn’t ask horseplayers to manage their own money, a critical aspect of the game. The Handicapper of the Year award and the top prize of $750,000 rest solely on those three days.

Christian Hellmers, who recently won nearly $270,000 at the Horseplayer World Series, another tournament in Las Vegas, believes the NHC, World Series and perhaps the Breeders’ Cup Betting Challenge could be combined to create more of a “series” to determine Handicapper of the Year or perhaps to honor more than one horseplayer for all the hard work.

“I believe horse racing is a quest for truth,” Hellmers said. “I want to be recognized for the blood, sweat and tears I put in. Horseplayers work just as a hard as jockeys, trainers and grooms. And nobody knows it.”

While there are disputes over money, formats, and structure, everyone agrees tournament play could be an excellent way to drive new players to the sport, especially if shows like Horseplayers or other television content incorporating the NHC can grow. Chamblin and Smith agree the message for new players is that contests are fun, they often involve a low, fixed investment, and they can also serve as a first step toward learning the intricacies of pari-mutuel wagering.

For all of the parties involved to reach their goals – horseplayers, tournament organizers, racetracks, and the NTRA, collaboration might be crucial.

“We work in cooperation with the industry,” said Smith about HorseTourneys. “My goal is to help the industry stakeholders improve their programs and get more participation.”

Chamblin concluded: “We’ve got to take the existing tour members and use them as soldiers to communicate how fun tournament play is. It’s kind of a game within the pari-mutuel game. We can’t do that without the help of the players.”

The “fun” of playing and the relative low entry fee have little to do with the potential handicapping tournaments have as highly valuable marketing tools. To build the market, racing needs to appeal to its prime prospects–people who like to gamble. It’s a sizable market. Tournaments are the most credible method to tell these prospects what they want to hear–you can win playing the horses. When players like Hellmers, McFarland and Sumja consistently show up at final tables, it’s provides convincing evidence that you can beat the game. That’s the incentive needed to draw more gamblers to horse racing. Of course, the more publicity and television coverage these events get (think poker), the more impact there is.

Voice of Reason

The only way to do it, is to create numerous feeder tournaments. The poker rooms all do this. htere needs to be weekly competitions, that pool in mass amounts of players at low buy ins to make this work. I am not sure the federal laws allow for it. I twould have to go through the on line ADWs. I dont think they have an interest in raking just a few bucks. Too much hassle for them.

Charlie Davis

That already exists on mckay’s site and others.

http://www.equinometry.com Equinometry

I never received an explanation from the NTRA regarding the $2,069,000 prize payout. The number reported right after the NHC concluded was $1,862,000. It was reported by both DRF and NTRA. Would be nice to know where that additional $200K of prize money went. Adding that into the equation increases the takeout rate significantly.

Charles Smith

I’m sorry, but it’s very hard for me to relate to the concept of considering tournament handicappers to be the best all around horseplayers. Yes, there is money to be made by the elite tournament players, but at the end of the day, the six figure and up players who are the typical customers of rebate shops are the real elite players in the betting world. Most of the tournament guys don’t have the bankroll or the stones to play the way the rebate people do, day in and day out.

Bman

OK, call it what you want. Tournament Player of the Year. If they had the bankroll, they may not be playing in them. It’s a chance for the small guy to put 2 or 3 great days together, luck or skill, but pretty much both as you know and walk away with 5 figures. Thanks for letting us know the real elite players aren’t in these contests.

Vudu

The show was interesting after a couple of episodes.
Sometimes just to see some of the characters get their comeuppance, but it was fun.

I doubt that the handicappers were presented exactly as they are – they were caricatures or I’m sure edited into stereotypes in post production, the way all “reality” shows are.

Affordable handicapping contests are fun. But if you note that tournament play is not necessarily played the same way as you would if you just went out with a personal bankroll. Not every contest required you to play your own money.

Their objective was a big longshot strike to put them in the Big Contest contention based upon points. In some regards, is that much different than a casual player who goes out & tries to play long shots?

KevinTCox70

I hate the cowboy, too !

Larry Ensor

I take back my comment. A sense of humor goes a long way in my book. Besides most winners always seem to have an attitude. But, getter a better fitting hat. Or some cows

KevinTCox70

My hat’s fit fine until I became famous !

Larry Ensor

Yup, the price of fame can be steep.

Enjoyed the banter. I’m in your camp now cowboy.

KevinTCox70

High time I put and end to my self imposed moratorium on this topic discussion.

Firstly, when it comes to the financial aspects of tournament expenses, takeout, “missing money”, et al, my opinion is —I have no opinion.

While that doesn’t sound very sexy, sometimes not having an opinion may be the best thing—at the time. I’ve read with vested interest, the details put forth by Lenny Moon and others, regarding the expenditures of the NHC and tournaments in general, and I must say, my curiosity was piqued somewhat. As a self professed “grinder” I realize the importance of knowing where my wagering dollars are going at all times. When I found out that NYRA was knowingly and illegally charging a higher takeout rate for an extended peiod of time, I positively went bananas. In their eyes it was only a small percentage, but unfortunately that seems to be the common tenor these days when racing organizations are dealing with the betting public—screw them first, and answer questions later. I recently ( briefly ) discussed some of these issues with Keith Chamblin, as I too, have slightly curtailed my tournament activity this year due to the financial ambiguity of the aforementioned issue. While he did, in fact, explain some details to me in more intrinsic detail, I feel this issue will never be fully resolved until ALL tournaments ( Live, online, whatever ) COMPLETELY display financial breakdowns of expenditures and payouts. This will eliminate the Wizard of Oz aspect of “Pay no attention to that man behind the curtain.” feeling. The tour, and the tournaments within, while expanding exponentially throughout recent years, are in a precarious state right now, as we’re sailing into some uncharted waters with regards to expansion, ( both monetarily and membership wise ), and it’s vital that no one— Lenny, Keith, myself included, paint themselves into a corner regarding these issues, until a TRUE liaison between players and tournaments has been established, with all cards on the table.

In regards to the changes of the tour itself , I somewhat agree with my buddy Brent Sumja regarding the current prize structure. While I chased the crap out of the tour last year, ( only having started full bore in May or June ) it’s simply not financially prudent to “go for the glory” right now. While I will acquiesce and say that I was a proponent of some changes being made ( points structure, for starters ) and took a little grief from some of my contemporaries for being vociferous in the matters, eventually, some of them capitulated and understood my reasoning. However, the prize structure is still a little out of wack. To entice tour members to “go after it”, there must be a larger pie at the halfway points, not just slices. These tournaments require car rentals, gas, airplane tickets, hotel reservations, schedule modifications, etc. Even if it means reducing the top prize again, I believe it will be a case of “one step backwards” to eventually move “two steps forward”.

And on the note of the NHC finals prize structure, you CAN NOT, I repeat, CAN NOT have the winner of the consolation tournament ( in effect, the best loser ) collect more money than someone finishing in the top ten of the finals. Handicapper (def) : “One who predicts the winner of a horserace.” With regards to the format of the finals. It’s fine. What certain people need to realize, is that it’s not the National Money Management Championship, it’s the National HANDICAPPERS Championship. Having 500 contestants throatily cheering on the same races in that room is what this thing is all about. Additionally, this format allows you to pick your own races as well, so you have that certain “freedom of expression”, if you will. At the track, sometimes bettors will ask each other “Gun to your head, what jockey do you want ?” Well, that’s the beauty of this tournament, is that the gun is put to your head several times each day, so suck it up and HANDICAP. In my humble opinion, I have the rest of the year to “Manage my money” playing the horses, that’s why this is called a HANDICAPPERS TOURNAMENT.

No one is saying UCONN is the best college basketball team in the country, simply that they were the best in March.

Looking forward to learning more.

Marie Jost

Kevin, your UCONN analogy is a good one, except every team in the tourney only gets one entry. The NHC should only allow one entry for each individual and then it is truly a level playing field.

KevinTCox70

I agree.

Charles Smith

Mention was made of Brent Sumja in this article. Before the advent of rebate wagering lured me out of California (where, to this day, rebate ADW’S are not allowed to operate) I resided in San Francisco and attended the Northern California tracks frequently. From the early 90’s to 2004, Sumja was a successful trainer in nor cal. I recall him as being a sharp handicapper and decent poker player as well. I don’t recall why he quit training, but the mere fact that he was willing to transition from cash horseplayer to tournament play, and stomach the expense entailed in touring as a tournament player, indicates to me he thought it was easier to succeed financially that way. A serious rebate player will average 3000, 4000, 5000 a day in cash wagers. Between entry fees and traveling bills, a full time tournament player might have 40 to 50 thousand worth of expenses to cover over the course of a year. I’ve averaged over that much in any given two week period as a rebate player this year. If you don’t have the bankroll or the nerve to bet tall stacks of money, day in and day out, tournament play is a good option.

Richard Grose

Charles, why does it have to be either or….why can’t you be a tournament player and a rebate player ??

I agree with Brent..the risk / reward for the tour money is not really worth it, but the risk / reward for the $750,000 is definitely worth it in my book.

My wife and I enjoy going to Saratoga, Belmont, Del Mar, Santa Anita, and other great tracks, play in tournaments with like-minded people, while still making ,my own plays. I have met many good people and new friends traveling the tracks.

Charles Smith

Richard, thanks for your reply. To me, the elite few players that you see winning the majority of these handicapping tournaments are utilizing 40 to 50 thousand in total really expenses to churn out a profit. Over 90% of professional horse players are rebate players. Any professional player will tell you that 3 or 4 percent in profit is a good year for them. Professional players need to be clever money managers as well as good handicappers. Someone who buys into a play money tournament or wins a free spot into a play money tournament and wins big bucks is to be congratulated, but they can’t be called top handicappers, because the dynamics of what they do is vastly different than hard money race betting. All the best to tournament players, though. You get in where you fit in. Brent Sumja knows that, that’s why he stopped playing World Poker Tour events and concentrated on horse tournaments. He only cashed twice in WPT, but he’s in the hunt to win every play money horse tournament he plays in.

Ron Rios

At least the NHC you have to qualify and not buy your way in. At breeders cup challenge people can buy their way in, I am glad brent sumja is honest and tells us how much he spent he is a standing up guy, unlike hellmers who buys he is way in instead of earning it… put us all in a room with a racing form and and make up pick winners would be the best way to solve this issue…